Botswana’s trade balance deteriorated in the second straight month as the diamond dependent country posted another monthly trade deficit, unlike other months it reported surpluses. Still, the country is on track to record its first yearly trade surplus in over two years.
Statistics Botswana’s latest International Merchandise Trade statistics for October 2022 shows that the landlocked country imported goods and services worth P7 billion, lower than the P12 billion import value for September. The decline in imports was the result of diamond imports falling by 80 percent in the month under review. Though Botswana is a major exporter of the shiny luxurious stones, the country imports diamonds from De Beers mines outside Botswana, where they are aggregated, valued and then sold to outside buyers.
On the other side of the trade, the country’s export value for October was P4.8 billion, falling by 55 percent from the September figure of P8.8 billion. The reduction was largely attributed to the 64 percent decline in diamond exports, falling from P7.7 billion to P2.8 billion between September and October. Diamonds account for 70 percent of Botswana’s total exports.
With the value of imports higher than that of exports, Botswana recorded a monthly trade deficit of P3 billion, slightly lower than the P3.2 billion deficit registered in September. Prior to the two successive deficits, the country cruised through four consecutive surpluses (May to August), resulting in quarterly gains that have improved prospects of an overall trade surplus for the year since 2019.
In the first quarter of the year, the trade surplus was P250 million, followed by P1.6 billion surplus in the second quarter. Despite the largest monthly trade deficit in September, the trade balance was positive with a surplus of P2.3 billion for the third quarter.
The positive quarterly flows of trade have been driven by strong diamond sales, making a comeback from period of widening trade deficits. In 2021, Botswana recorded a yearly trade deficit of P10.8 billion, a significant improvement from 2020’s P25.4 billion trade deficit – the largest trade imbalance on record.
The historic deficit extended the P14.2 billion shortfall recorded in 2019, the third highest since 2012’s trade shortfall of P16.3 billion. The trade deficits have been a reversal of gains made in the five- year period of consecutive trade balance surpluses that started in 2014 before coming to an abrupt end in 2019.
